Welcome to our #102 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on legendary investor Jeremy Grantham and his warning that we are in ‘super bubble’ territory which occurs every 100 years.
What are the warning signs and what can investors do?
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You can review the news in brief so you stay on top of global financial, economic and investing trends.
And don’t forget to listen to The Purse Podcast interview with Marcia Dawood who has invested in 200 early stage private companies. She currently serves as the Chair of the Board of the Angel Capital Association (ACA) and is a venture partner at Mindshift Capital.
We talk about investing in women & diverse teams, angel investing and ‘what makes a good investor’?
I hope you enjoy this week’s newsletter.
Until next week,
Jana
‘Super bubble’: legendary investor Jeremy Grantham warns of a market crash
What are the warning signs that we are in a ‘super bubble’ and what can investors do?
Jeremy Grantham, the legendary US investor and GMO co-founder, has warned of a ‘super bubble’ in financial markets, which occurs every 100 years, and can ‘really wipe you out like 1929 did’.
In an interview with Bloomberg…
…he has said that the wild speculation on meme stocks, cryptocurrencies and other high-risk assets has peaked. And has warned that:
the S&P 500 could fall 50%+
the Nasdaq could crash even harder
and the crypto market would enter a ‘crypto winter’ similar to what happened in 2017-2018.
There are distinct warning signs that a ‘super bubble’ market crash is likely to happen, similar to 1929 and 2000:
An acceleration phase:
the market gains become far greater than the average
Small caps detach:
the small caps in the US eg the Russell 2000 Index moves in the opposite direction to the blue chips such as the S&P 500.
What should investors do?
According to Jeremy Grantham, investors should hold cash and look to buy value stocks (ETFs) outside of the US market (which is the most overpriced market).
And specifically look to the emerging markets. Or even invest in the UK or Japan which, by comparison to the US, may only be ‘moderately’ overpriced.
News in Brief
Financial news
US inflation surges to 7.5% in fastest annual rise in 40 years. Higher than expected jump in CPI in January puts pressure on the US Federal Reserve to move more aggressively on interest rates.
UK economy grew 7.5% in 2021, the fastest since the 1940s. But, it follows a 9.4% fall in GDP in 2020, when Covid-19 drove the economy into a steep slump. (In December 2021, the UK economy only grew by 0.2% due to Omicron).
UK house prices at record levels: In January, the average UK house price on Halifax’s index rose to a new record high of £276,759. That is approximately £24,500 up on this time last year, and £37,500 higher than two years ago, before the pandemic.
Investors pull $1.5bn from bond ETFs in January on inflation fears. The selling comes amid a sharp repricing of bonds as central banks start ti raise interest rates, in the face of multi-decade high inflation in much of the developed world.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin on-chain data hints at institutions ‘deploying capital’ at the expense of hodlers. (See the current bitcoin price).
JP Morgan predicts long term bitcon price $150,000 while the fair price sits at $38,000. And their analysts have said: “The biggest challenge for bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.”
El Salvador plans to issue first bitcoin bond next month. The government is still planning to issue $1bn for the first bond. And it is likely to be oversubscribed by $500m (at least).
Russia expected to regulate crypto like foreign currencies. A draft law is expected to be introduced by February 18th.
BlackRock planning to offer crypto trading, sources say. BlackRock will allow its clients to trade cryptocurrency through Aladdin (short for “Asset, Liability, Debt and Derivative Investment Network”), the asset manager’s integrated investment management platform.
Gucci buys land in ethereum game The Sandbox to create metaverse experiences. The luxury brand also will sell virtual items for players to wear in the game.
Cool Pets NFT drop: gas prices soar as much as 7000%. While the mint price for Cool Pets was set at 0.5 ETH, some users paid more than double that in transaction fees.
FlamingoDAO NFT portfolio is now worth $1bn. The exclusive DAO’s membership buy-in has increased over 350-fold to 3,000 ETH, or a hefty $8m. The NFT portfolio boasts 215 CryptoPunks and 22 Bored Apes.
The Purse Podcast
We cover the following in our conversation:
investing in women & diverse teams
angel investing
venture capital
female investors
what makes 'a good investor'?
and more
Please enjoy! Listen on iTunes and Spotify+
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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‘Super bubble’: legendary investor Jeremy Grantham warns of a market crash. And listen to our podcast with Marcia Dawood, investor in women and diverse teams